Money makes the world go around, or so they say. The truth is that money is definitely a significant part of your life, but the Earth does just fine without it. Every person in the nation will tell you, though, that the more money you make, and the more wealth you have, the better off you will be throughout your life. But what happens if you lose your job or get injured while working?
Many circumstances could come up that would make it hard for you to continue surviving. The great thing is that if you plan ahead and consider all the options before they happen, you will be much better off than the person that lives day to day without thinking about it until they need it.
That is why you are here, after all. So, let’s jump right in and go over some of the best tips on how to safeguard your income so you do not become one of the thousands of homeless people with a similar story.
Table of Contents
Build Up Your Savings Account
For many, this will be one of the hardest things to do. It is simply too easy to dip into the savings account to get that new tool you want or the couch you have been eyeing for a while. A savings account is a must-have if you ever want to have a little security in your life. Find a bank that is not part of your main financial institution to make it a little more inconvenient to transfer out. That way, when you look at the balance in your checking account, it will not automatically show the balance for your savings.
Experts worldwide say that you should have at least six months’ worth of bills saved up, or more if possible. This is called your emergency fund in case something should happen to your monthly income. It is not meant as a fund that can be used and then replaced. Instead, it is a savings account that is only touched when an emergency with your income arises.
A Retirement Fund Is Not An Option
You have heard from the time you could walk about how vital a retirement account is, but for many, it is not a priority until it is almost too late. The sooner you start paying into a retirement fund, the better off you will be when the time comes to hang your work uniform up for good. Better yet, find an employer that will contribute money to your retirement fund every time you do, which will help the savings build faster.
You need to be careful when you get into a retirement fund controlled by someone else. Let them invest your money into stocks and bonds, but not the volatile ones that could make you lose every penny you have put into the account. It is imperative that you have control over the aggressiveness of your investing. That way, if you end up losing it all, the only one to blame would be the person looking back at you in the mirror.
Invest In Income Protection Insurance
One of the most common questions that will come up when you are discussing insurance options is what is income protection insurance? The answer to that is easy, but first, you need to figure out some math. You need to know how much, if any, your current plan at work offers you. The thing with this coverage is that it may not be even close to what you need, so it is still legal to go ahead and get extra coverage from another insurance carrier just in case something serious should happen that would keep you from working.
A basic income protection insurance policy will send you monthly checks that can be up to 75% of your average monthly income, as long as the reason you are not working is one that is listed on the policy. That is why it is so important to take the time to play out every situation that could happen and make sure that it is covered. For example, suppose you are an underwater welder and work around sharks occasionally. In that case, you will want your income protection policy to include that circumstance. Otherwise, you may get bitten by the shark and then eaten by the bill collectors.
Set A Budget And Follow It
Another common mistake that you will see younger consumers make is that if there is money in the bank, it needs to be spent. That may be a fun way to live, but it is also a great way to get yourself into some serious debt. You want to take the time and draw up a current budget. List all your bills and payments going out, along with all the income you have coming in. This is when you will add a set amount to your bills as a savings fund, that way, it will be easier for you to build the savings account up.
The problem that people have with budgets is that it takes time and dedication. It is not something you write down and then throw aside when a dress you have wanted goes on sale, or a set of truck floor mats that is usually never in stock happens to be hanging on the shelf. Take the budget for what it is, a set guideline to help you achieve your financial goals.
Final Thoughts
Safeguarding your finances is not something that should ever be ignored. From the time you can work, your first check should have a budgeted amount going into a savings account and a retirement account. It may be hard when young because you are just trying to survive, but remember, surviving in your older years largely depends on how you prepare in your younger ones.
That is why it is essential to go through life with the thought of advancing. Making yourself better and more educated so you can climb the ladder of success, which also means making more money that can improve your way of life. But even when you are making money hand over fist, follow these three simple tips to ensure your future is full of success and happiness.
